The number of business startups in the UK has risen dramatically over the past year, with the improving economy promoting 392,189 budding entrepreneurs to take the plunge, new figures have revealed.
Research by credit reference firm ICC Credit found that new businesses increased by 34.5 per cent between 2002 and 2003.
This rise over just 12 months compares with a 38 per cent increase in startup numbers between 1998 and 2002. Six years ago, just 125,613 small firms were created.
The figures showed that while there were a massive 86 per cent more new firms started in 2003 than in 1998, 54 per cent more businesses failed last year than in the corresponding period.
However, ICC Credit pointed out that the rate of insolvencies has fallen since 2001, with a nine per cent increase last year comparing with a 12 per cent rise in 2002.
The dramatic rise in startup numbers appears to be a result of the improving economy, with business confidence sky-high as the UK emerges from the difficult global slump of the last two years.
Previous studies have shown that rising numbers of people want to go it alone, with nearly half of undergraduates and a clear majority of employees dreaming of becoming their own boss.
Spurred on by role models such as Richard Branson and determined to leave the nine-to-five grind, budding entrepreneurs are increasingly willing to take the plunge, despite the comparatively high failure rate of startup firms.
Matthew Debbage, of ICC Credit, said: “This is fantastic news for UK businesses and clearly demonstrates an uplift in confidence in the economy in the last year.
“We have identified a correlation between a period of interest rate rises and an increase in failure rates, and a corresponding decrease in failures when rates fall.
“We hope the monetary Policy Committee will consider the impact that further interest rate rises would have on business failures and will be prudent in its management of the economy,” he said.
